Pepper Group prices $600m PRS19 Transaction

Posted 26-10-2017

Pepper Group Limited has today priced its 3rd issue of the year, the $600m Pepper Residential Securities Trust No 19 (PRS19) RMBS issue following extremely strong investor support which resulted in a total AUD equivalent order book approaching $1.9bn.

The senior USD 250 million AAA rated 1 year bullet note priced at 1m US Libor plus 35bps and the senior AUD 100 million AAA rated pass through note priced at 1m BBSW plus 68bps. The AUD 75m Class A2 notes and AUD 57m class B notes priced at 1m BBSW plus 170 bps and 200 bps respectively both pricing tighter than recent benchmarks. Across all other PRS19 tranches, the pricing margins achieved were inside the equivalent March 2017 PRS18 pricing outcomes.

The Group structured the senior tranches to meet identified demand from its global investor base by issuing dual short duration tranches denominated in US and Australian Dollars. The funding strategy employed with this structure has resulted in an efficient overall cost of funds for the transaction.

Commenting on the strong outcome, Pepper Group’s Australian Treasurer, Matthew O’Hare, said “Our flexibility around deal structure and commitment to being regularly in the market saw the issue attract diverse investor take-up across all tranches, with significant bids from a number of key global investors and the need to heavily scale the order book. We couldn’t be more pleased with the support shown by investors for the issue and the pricing outcome achieved.”

Pepper Group’s Australian CEO, Mario Rehayem said “This strong result for PRS19 is recognition of the quality of our credit standards and long term performance of our loan portfolio. Importantly, it affords Pepper the continuing opportunity to provide every day Australians with the home loan financing solution that meets their individual needs, at rates which are competitive in market.”

Pepper Group was assisted in this transaction by National Australia Bank (Arranger) and nabSecurities LLC and Citigroup Global Markets Inc (Joint Lead Managers) and Commonwealth Bank of Australia and Westpac Banking Corporation (Co-Managers) on the US notes and Commonwealth Bank of Australia, National Australia Bank and Westpac Banking Corporation (Joint Lead Managers) on the AUD notes.

For more information please contact:
Melinda Hofman
Corporate Affairs Manager
Pepper Group Limited
(02) 9463 4675
0438 855 991

About Pepper Group Limited
Pepper Group Limited (Pepper) is a specialist residential mortgage and consumer lender and loan servicer, operating in targeted market segments in Australia and internationally, many of which are underserviced by traditional bank and other prime lenders. Pepper was established in 2000 and commenced lending as a specialist residential mortgage lender in the Australian market in March 2001.

Pepper offers a broad range of lending products including residential mortgages, auto and equipment finance, point-of-sale finance and personal loans. Pepper also provides loan servicing for its own products as well as for third parties across residential mortgages, consumer unsecured and secured loans and commercial real estate (CRE) backed loans. Pepper has become a specialist lending and loan servicing group through a combination of organic growth and targeted acquisitions across Australia, New Zealand, Ireland, the United Kingdom, Spain, South Korea, and Hong Kong and China through its 12% equity interest in PrimeCredit.

At 30 June 2017, Pepper had $53.3 billion of assets under management (AUM).